North Carolina Paving Company and Six Officials Sentenced in DBE Fraud Scheme
On November 23, 2015, Boggs Paving Inc. (Boggs Paving), Carl "Drew" Boggs, Kevin Hicks, Greg Miller, Greg Tucker, and John Cuthbertson were sentenced in U.S. District Court, Charlotte, North Carolina, for their roles in a disadvantaged business enterprise (DBE) scheme involving over $87 million in Federal and State-funded contracts. Arnold Mann was sentenced on November 10, 2015, for his role in the scheme.
The investigation revealed that Boggs Paving and the co-defendants used Styx Cuthbertson Trucking Company, Inc. ("Styx"), a road construction hauler and a certified DBE and small business enterprise, to help obtain government-funded construction contracts. Further, the co-defendants took steps to conceal their fraud, including running payments for the work performed through a nominee bank account in Styx's name and using magnetic decals bearing the "Styx" company logo to cover the "Boggs" logo on company trucks. Records indicate from June 2004 to July 2013, Boggs Paving was the prime contractor on 35 federally funded contracts, and was a subcontractor for two additional contracts, worth $87.6 million. Boggs Paving claimed DBE credits of approximately $3.7 million on these contracts for payments purportedly made to Styx. Styx only received payments of approximately $378,000 for actual work on these contracts and the majority of the money was funneled back to Boggs Paving and its affiliates. John Cuthbertson, owner of Styx, received kickbacks for allowing his company's name and DBE status to be used by Boggs Paving. In 2014, all charges were dismissed against Styx.
Boggs Paving was sentenced to pay a $500,000 fine. Drew Boggs, President of Boggs Paving, was sentenced to 30 months in prison and a $15,000 fine. Kevin Hicks, Chief Financial Officer of Boggs Paving, was sentenced to 2 years of probation and a $2,000 fine. Greg Miller, Vice-president of Boggs Paving, was sentenced to 15 months in prison. Greg Tucker, Vice-president of Boggs Paving, was sentenced to 2 years of probation and a $1,000 fine. John Cuthbertson, President and owner of Styx, was sentenced to 3 months of home confinement followed by 21 months of probation, and a $2,000 fine. Arnold Mann, Project Manager of Boggs Paving, was sentenced to 2 years of probation and a $7,500 fine.
We conducted this investigation with the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division.